KESM feels trade war effects, earnings slump

19 Sep 2019 / 21:05 H.

PETALING JAYA: KESM Industries Bhd’s net profit slumped 79.8% to RM2.29 million for the fourth quarter ended July 31, 2019 from RM11.32 million reported for the same period of the previous year, due to lower demand for burn-in, testing and electronic manufacturing services.

Revenue for the period stood at RM70.90 million, a 16.8% decrease from RM85.27 million registered previously.

The group has proposed to declare a final dividend of 6 sen per share for the quarter under review.

KESM’s full-year net profit also plunged 84% to RM6.28 million from RM39.34 million a year ago, on the back of a 12.1% decline in revenue to RM307.38 million from RM349.78 million.

Looking ahead, the group said the market weakness caused by the series of tariff hikes between the US and China have yet to abate.

“Barring further escalation of trade wars and major economies slipping into recession, the group is expecting a progressive recovery in 2020.”

It said the group remains cautious in capital spending, and will further its staff training and development in automation to drive productivity.

KESM also noted that the global semiconductor industry is forecast to decrease 9.6% to US$429 billion (RM1.8 trillion) in 2019 from US$475 billion in 2018.

“This decline is being driven mainly by lower memory pricing, the ongoing impact of the trade disputes between US and China and the forecast of sluggish growth in China.”